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Gold Price Prediction – Gold Prices Remain Buoyed Despite a Rising Dollar

David Becker
US yields rise helping to buoy gold prices

Gold prices moved slightly higher on Thursday, despite a rising dollar, as the rally in the yen somewhat dulled the continued selloff in the euro.  The bank of Japan kept interest rates unchanged as widely expected, but extended its dovish outlook until the middle of 2020. US yields edged higher, despite jobless claims jumping the largest amount seen in 19-months. US durable goods shot up 2.7% in March after declining 1.1% in the prior month. Orders for transportation equipment rebounded 7.0% after falling 2.9% in February.

Technical analysis

Gold prices whipsawed attempting to push above resistance near the 10-day moving average at 1,278, but failing and consolidating in a tight range. Support on the yellow metal is seen near an upward sloping trend line that comes in near 1,260. Short-term momentum has turned positive as the fast stochastic recently generated a crossover buy signal. The fast stochastic has moved from a low of 7, earlier in the week which is below the oversold trigger level of 20f, to 23, which reflects accelerating short-term positive momentum. Medium-term negative momentum is decelerating as the MACD (moving average convergence divergence) index is printing in the red with a rising trajectory which reflects consolidation.

The Bank of Japan Keeps Rates Unchanged

Bank of Japan kept monetary policy unchanged, which was widely expected.   The central banks forward guidance became more dovish and they said that the current stimulus would be kept in place at least through spring 2020.  Previously, BOJ had pledged easy policy for “an extended period.”  However, the new forward guidance goes even further.  The BOJ released its first forecasts for FY2021, with inflation seen remaining below target then at 1.6%.  This new information would imply that the central bank would possibly keep interest rates low until the spring of 2022.

This article was originally posted on FX Empire

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